2013 ANNUAL REPORT
Independent Television News Limited Registered Number 548648 2013 ANNUAL REPORT
CONTENTS
The Headlines Page 3
Our Business Page 6
Our People Page 16
Chief Executive’s Review Page 22
Chairman’s Statement Page 26
Strategic Report Page 28
Directors’ Report Page 32
Statement of Directors’ Responsibilities Page 34
Independent Auditor’s Report Page 35
Accounts Page 37
2 THE HEADLINES
3 THE HEADLINES
2009 2010 2011 2012 2013 2012 2013
£5.0m £3.7m £3.7m £5.0m £2.3m 3.4% 4.7% £0.9m
£2.9m
£7.9m swing in operating profit* Operating profit margin* rises
ITN’s annual operating profit* rises to £5m in ITN’s operating profit margin* increased from 2013, a £7.9m upwards swing since 2009. 3.4% to 4.7%.
* Operating profit on ordinary activities before exceptional * Operating profit margin before exceptional items items
ITN sweeps the board ITN Productions growth continues
ITN won 43 significant industry awards across ITN Productions continued to grow, producing its divisions in 2013, including prestigious hon- 134 broadcast hours, including seven new series ours from the Royal Television Society and the and 23 advertising campaigns. Foreign Press Association.
4 THE HEADLINES
ITV News gets a new look Channel 5 News revamps 6.30pm programme ITV News launched a new look studio and branding as part of ITV’s brand refresh. Channel 5 News launched NewsTalk Live, the UK’s only daily primetime current affairs debate show.
Channel 4 News wins an Emmy ITN Source secures Qatar deal
Channel 4 News took home the coveted ITN Source won a multi-million pound licensing International Emmy Award as well as being contract with the Qatar Foundation. named Royal Television Society Programme of the Year for the second year running.
5 “ITV News always puts people Day in day out, ITV News delivers the Etchingham on News at Ten, from a at the heart of every story; big exclusives, distinctive reporting state-of-the-art Chroma key virtual informing the public, chal- and in-depth analysis from a team of reality studio at Gray’s Inn Road. Un- lenging decision-makers and expert journalists, to eight million der the leadership of Editor Geoff Hill, generating debate through viewers around the UK. each programme is bolstered with our award-winning journal- ITV News’ range of specialists includ- ism. Operating to the very ITN has made news bulletins for ing Rageh Omaar, Tom Bradby, Lucy highest standards, our team ITV since its inception in 1955, first Manning, Penny Marshall, James of expert correspondents and as ITN News and from 1999, as ITV Mates, Richard Edgar, John Irvine presenters consistently push News. Every day of the year, ITV News and Lawrence McGinty. International boundaries to produce quality airs national news programmes at bureaux in Johannesburg, Tel Aviv, reports and exclusive con- 1.30pm, 6.30pm and ITV News at Ten, Washington, Brussels, Dubai, Beijing tent on a broad range of news informing public opinion and generat- and Rio De Janeiro ensure that cover- stories, both within the UK and ing debate through news exclusives, age of news at home is reinforced by across the globe.” investigative journalism and unique, extensive first-hand reporting around accessible reporting on the latest the world. news agenda. The award-winning regional offer- Daily news bulletins are presented by ing, ITV News London, is also pro- Geoff Hill Alastair Stewart and Mary Nightingale duced in the newsroom, providing at 6.30pm and Mark Austin and Julie a ground-breaking regional news Editor
6 ITV News launched a brand new look in January 2013
operation that continues to innovate and a number of one-off documen- awards along the way, including the to be the authoritative news outlet for taries and live special programmes Broadcast Digital award and an On- the Capital. Looking to longer-form for ITV. ITV News presenters and line Media award. Users can access coverage, ITV News is responsible for correspondents played a crucial role a live stream of news, multimedia ITN-produced Tonight documentaries, in ITV’s critically acclaimed special stories, video clips, original content the recently announced On Assign- live coverage of the Royal Wedding, and blogs from ITV News’ top team of ment monthly current affairs strand Diamond Jubilee and the most recent specialist journalists. US Election. Together, the team have won numer- ous awards for their outstanding jour- nalism in recent years including three consecutive BAFTAs, an International Emmy, numerous Royal Television Society Journalism awards and for coverage of humanitarian issues, the prestigious Amnesty International and One World Media awards. In the words of one RTS judge, “ITV News is the programme which consistently gets Britain right”. Innovative, speedy and using the very latest in cutting-edge livestream technology, itv.com/news is the digital news hub for ITV News viewers. Since launch two years ago, it has steadily broken stories ahead of the com- petition and won a spate of industry ITV News political editor Tom Bradby Africa correspondent Rohit Kachroo reporting on illegal elephant poaching in Tanzania 7 Jackie Long joined the presenting line-up
“Channel 4 News continues to Channel 4 News is committed to higher proportion of viewers aged 16- push new boundaries deliv- challenging expectations with sto- 34 than any other terrestrial evening ering clarity, robustness and ries that reveal and inspire, innova- news programme. powerful storytelling from tively produced - with just a touch of Led by Editor Ben de Pear, Chan- our team of award-winning mischief. nel 4 News’ award-winning team specialists who hold people to of journalists scrutinise the day’s account and make compelling Made by ITN since its launch in 1982, domestic and foreign stories. The television.” Channel 4 News’ hour-long bulletin daily programme is presented by Jon is on at 7pm every week-night, with Snow, Krishnan Guru-Murthy, Cathy shorter programmes at varying times Newman, Matt Frei and Jackie Long, over the weekend. With an audi- with analysis provided by a roster ence of over 20 million viewers each of experts including Alex Thomson, Ben de Pear month, Channel 4 News also has a Lindsey Hilsum, Kylie Morris, Faisal Editor
8 The Governor Jon Snow meets Bank of England boss Mark Carney
Islam, Paul Mason, Victoria Macdon- Live analysis on key events is provid- in the modern age. ald, Michael Crick, and Gary Gibbon. ed through live blogs, special reports Cathy Newman’s FactCheck seeks Channel 4 News is produced in a on the UK’s and the world’s most sig- the truth behind claims made by custom built studio in ITN’s Gray’s Inn nificant news, all supported by blogs those in public office. FactCheck has Road headquarters. The programme from key editors and correspond- been commended for its statistical is a consistent critical success, re- ents. During 2013 Channel 4 News integrity and is frequently cited in the cently described by one broadsheet launched #DataBaby, an innovative House of Commons. Jon Snow’s daily journalist as “the must-see show for multimedia special report examining Snowblog tackles everything from opinion formers.” the huge online footprint we all leave global crises to events he encoun- Since its launch, the programme ters on his morning cycle. The long has been regularly awarded by the running SnowMail email round-up is Royal Television Society, BAFTA, Jon Snow’s unique take on the day’s Broadcast, Amnesty International and news, delivered directly to the in-box- One World Media for its home news es of viewers. Channel 4 News won stories, extensive foreign coverage all five of the top awards at 2013’s and team of experienced journalists. Online Media Awards, including best In 2013 Channel 4 News was awarded website and outstanding digital team the prestigious International Emmy of the year. Award and an unprecedented eight No news programme in the UK Royal Television Society awards, commissions more independent including Programme of the Year and filmmakers than Channel 4 News. In presenter of the year for Jon Snow. line with Channel 4’s commitment to Depth and attitude is the mantra for supporting the independent sector, Channel 4 News online. Channel both lone film-makers and larger 4.com/news is the home of the day’s production companies have an op- most important news, bolstered and portunity to showcase their work on enhanced by specialist insight and the evening bulletin and at Channel 4 expert commentary. News Online.
Channel 4 News International Editor, Lindsey Hilsum 9 “Channel 5 News is produced Channel 5 News has broken the NewsTalk Live, a debate-focused by a passionate, talented and mould of television news ever since news programme where expert enthusiastic team, and that it was launched by ITN in 1997. guests and news-makers discuss shines through on-screen. the most talked about stories of the Not afraid to lead on different Making headlines for a new style day. Both programmes are presented stories to other news pro- of informative news, Channel 5 by Emma Crosby supported by on- grammes, we are in-tune with News challenged the status quo screen talent including highly-expe- our viewers and proud to be a upon launch and continues to be a rienced Political Editor Andy Bell and distinctive but totally credible key part of the TV news landscape Chief Correspondent Tessa Chapman. news service.” 17 years later. Led by Editor Cris- ITN produced Channel 5 News from tina Nicolotti Squires, the Channel 1997 until 2005, and took up pro- 5 News team produces distinctive duction of the service again in 2012. news programmes every weekday at Since then ITN has built a new state- Cristina Nicolotti Squires 5pm and 6.30pm. Its flagship show of-the-art newsroom and virtual real- at 5pm is the first terrestrial tea time Editor ity studio at Channel 5 headquarters news programme and regular- and has delivered editorial excellence ly attracts audiences in on-screen. A combination of powerful excess of 600,000. home and foreign coverage in 2013 The 6.30pm pro- led to Channel 5 News being short- gramme was listed for the prestigious Programme revamped of the Year category at the Royal Tele- by ITN in vision Society Journalism Awards, 2013 whilst an agenda-setting series on as online abuse made the shortlist in the Home News category. As well as producing daily news out- put, the Channel 5 News team also collaborates with ITN Productions to deliver long form programming on key stories such as the Philpott trial in Derby, the Cleveland kidnapping, and topical debates.
Channel 5 News is presented by Emma Crosby
10 11 “ITN Productions takes ITN’s ITN Productions is the creative and Company of the Year in 2013 and brand firepower and focuses commercial hub of ITN. 2014. With a 2013 production slate it into a single commercially of 134 hours, the breadth of pro- driven business delivering a Since the division was formed in gramming from ITN Productions has wide range of high-quality, 2010, it has become an important expanded to include powerful one-off fast-turnaround content – part of ITN’s profit and integral to documentaries such as Sri Lanka’s from RTS-winning television its future growth plans, winning new Killing Fields, long-running current programmes to cutting edge contracts and commissions and di- affairs contracts such as Dispatches digital sports versifying into a wide range of content and The Agenda to popular factual production.” production. series including Harrow – A Very British School. As well as a client In television, ITN Productions base across all major UK broadcast- has won a host of awards for ers, ITN Productions has grown a ground-breaking programmes and Mark Browning strong international presence making been shortlisted as the programmes direct for the interna- Managing Director UK’s Independent tional market and airing in over 200 Production countries. Digital production and syndication spans major newspaper websites as well as some of the world’s largest video portals. In addition, ITN’s own consumer-facing brand on YouTube, the hit original channel Truthloader, has garnered award nominations and over 500,000 subscrib- ers for its unique brand of citizen journalism.
Fly-on-the-wall documentary Harrow - A Very British School tripled the average ratings for its slot on Sky1
12 The Agenda with Tom Bradby returned to ITV for its fourth series. The show was recom- missioned for 2014
A burgeoning TV commercials busi- Active and Morrisons. The division ness has seen ITN Productions take also has major public sector con- the lead in live and fast-turnaround tracts with organisations including advertising – from live in Afghani- on TV as well as advertiser funded the Department of Health. Hundreds stan for the award-winning TA Live programming. Digital solutions are of hours of bespoke programming for recruitment campaign to the stars of also delivered for corporate and com- business sectors including banking, The Hobbit: The Desolation of Smaug mercial clients that want multimedia transport and health have been pro- from the red-carpet for Warner Bros. viral content to be viewed and shared duced by ITN’s Industry News team High-profile idents and bumpers have across online, mobile and social fronted by Natasha Kaplinsky and the also been produced for brands spon- platforms. business is currently expanding in to soring some of the biggest shows In sport, ITN Productions won a major the United States. new multi-year contract with News UK to deliver in-match clips and highlights packages of all Barclays Premier League football match- es for The Sun, The Times and the Sunday Times. The division is now also producing coverage of Scottish Premier League and FA Cup matches alongside longstanding contracts with sports rights holders such as SNTV and MP & Silva. ITN Productions is now a major new player in the sports production business. For corporate clients, ITN Produc- tions produces innovative creative solutions for internal and external communications strategies, produc- ing content for brands such as Virgin
The TA: Live adverts were broadcast live from Broadcaster Jon Champion provided the Helmand Province, Afghanistan commentary for Premier League clips. 13 ITN Source represents partner archives, including ITV
ITN Source is the content licensing content added every month. “ITN Source is an innova- division of ITN, syndicating on-the- tive, digital content licensing The archive contains footage of many day news and licensing archive foot- business. We syndicate ITN’s award-winning exclusives from ITN age to clients around the world. award winning on-the-day and other media organisations. Foot- news footage and license high In addition to ITN’s own archive of age licensed by ITN Source features quality video archive to clients distinctive news footage dating back in Oscar-winning films including The around the world on a daily to 1955, ITN Source represents a King’s Speech, documentaries, ed- basis.” number of archive partners includ- ucational products, advertisements, ing Reuters, ITV, ANI, Fox News and mobile apps, art installations, corpo- Fox Movietone. This vast collection rate productions and music videos. makes ITN Source the gateway to an One sector which has seen signifi- extensive library of footage covering cant growth is the licensing of archive international news and events, en- content to heritage projects around tertainment, music, wildlife, natural the world. Andy Williams history and newsreels dating back While ITN Source is headquartered Managing Director to 1896, with 500 hours of digitised in London, it is a truly international
14 ITN Source is one of the world’s leading digital archives, with over 500 business with sales offices in New hours of digitised footage day or a more comprehensive service York, Paris, Sydney, Johannesburg added every month. including complete reporter packag- and Tokyo, and a number of sales es, enabling them to fully integrate agents that serve clients in numerous ITN’s content into their own news other territories and markets. programmes around the world. International operations are un- ITN Source News also provides inter- derpinned by the sophisticated national broadcasters with facilities e-commerce portal ITNSource.com. the world can search and access ITN and services including a fleet of SNG Customers in the UK and worldwide Source content at any time regardless trucks, studio hire, plug in and play use this portal to search, preview and of time zone and can be delivered wallboxes at key locations in London download content from ITN Source. footage within hours of requesting it. and use of our newsroom camera for This means that clients from all over live-spots 24/7. ITN Source is leading the industry in content digitisation and preservation of archive video material. The com- pletion of Project Digital Archive gave ITN the UK’s first fully digitised major news archive. This goldmine of iconic content is now even easier for cus- tomers to search and download, with the facility for clients to download broadcast quality footage straight to their edit suites from ITNSource.com In addition to licensing archive mate- rial, ITN’s award-winning on-the-day news footage is syndicated to clients around the world by ITN Source News. Clients can choose to receive a highlights package featuring select- ed footage from the key stories of the
15 OUR PEOPLE
16 BOARD OF DIRECTORS
John Hardie Maggie Carver Chief Executive Officer, ITN Chairman, ITN
John Hardie joined ITN in June 2009 as CEO. Prior to join- Maggie Carver is Chairman of ITN and ITN’s Audit Commit- ing ITN, John was EVP at Walt Disney Television EMEA from tee. She is also UBM’s representative on the Board and has 2001 to 2009 where he ran the region’s Disney Channels a background in investment banking followed by a career portfolio, and was Chairman of German broadcaster Super mainly in the media sector. Previously she was Managing RTL and CEO of Jetix N.V. (formerly Fox Kids). Between Director of Channel Four Racing and Global Broadcast 1997 and 2001 John was Marketing and Commercial Direc- as well as being Chairman of SDN Ltd. Maggie has been tor of ITV Network Ltd. He started his career with 14 years non-executive director of Channel Five and programme at Procter & Gamble. John is currently Chairman of the producer RDF Media. She is MD of Carvercare Mobility Royal Television Society. Group, Chairman of Racetech and a non-executive director on the boards of the Service, Sound and Vision Corporation and the British Board of Film Classification.
Simon Pitts Geert Linnebank
Simon Pitts is Director of Strategy and Transformation at Geert Linnebank is Thomson Reuters’s representative on ITV. Simon joined ITV in 2000 and has held roles in ITV’s the ITN Board and Chair of ITN’s Remuneration Commit- public affairs, regulatory and new media departments tee. Geert was Editor-in-Chief of Reuters from 2000 to 2006 before joining the strategy team in 2007. He was promoted and Reuters Global Head of Content from 2002 to 2006. He into his current role in January 2011, the main focus of joined the company in Brussels in 1983 as a correspondent which is to manage ITV’s Five Year Transformation Plan. covering European Union affairs. Simon also runs SDN, ITV’s digital multiplex business, and sits on the board of Digital UK. Before ITV Simon worked in the European Parliament in Brussels, where he specialised in media issues.
17 BOARD OF DIRECTORS
Mike Stewart Andrew Garard
Mike Stewart joined the ITN Board in November 1999. Andrew joined ITV as Group Legal Director and General Pre-January 2010 he was Managing Director of Teletext Counsel in November 2007. Previously, Andrew was a Limited. He also chaired Rental Systems Limited, an on- Partner in the corporate department of LeBoeuf, Lamb, line travel retailer, and co-chaired Inview Interactive Limit- Greene & Macrae, focusing on mergers and acquisitions ed, a television data services company. Prior to Teletext he and projects primarily in the telecoms & media sectors in was Director of Corporate Development at Philips Electron- Europe, Asia and the US. Prior to that, Andrew was Group ics UK Limited and Managing Director of Philips Defence. General Counsel & Company Secretary at Cable & Wireless PLC, responsible for global legal, regulatory, compliance & insurance affairs. He has also held positions at Reu- ters Group PLC and in the corporate departments of both Freshfields and Clifford Chance.
Bryan Martin James Scorer Chief Financial Officer, ITN Director of Business Affairs & Company Secretary
Bryan was appointed Chief Financial Officer of ITN in 2009. Solicitor James Scorer joined ITN in 1996 in the dual roles Having initially trained and qualified with PwC, Bryan spent of Director of Business Affairs and Company Secretary. As the next 16 years working at Reuters, progressing to Global such he is involved in all aspects of ITN’s business. Previ- Head of Finance. Bryan is an alumni of the London School ously James was a partner at media lawyers, Olswang. of Economics.
18 MANAGEMENT TEAM
Geoff Hill Ben de Pear Editor, ITV News Editor, Channel 4 News
Geoff Hill was appointed Editor of ITV News in September Ben de Pear is the Editor of Channel 4 News, produced by 2013. Prior to that Geoff was Editor of Channel Five News. ITN for Channel 4. Ben was appointed to the role in July He had rejoined ITN from CNN International, where he was 2012, having joined Channel 4 News in 2005 as a senior Director of Coverage. Before this Geoff worked for ITN for foreign producer, later becoming head of foreign news, nearly a decade from 2000 until 2009 where he held senior where he led the programme’s investigation into the end input and output positions at ITV News, rising to Pro- of Sri Lanka’s civil war which prompted a UN investigation gramme Editor, with responsibility for the flagship News at and global calls for a war crimes tribunal. This formed the Ten. He went on to launch and run the 24-hour sports news basis of 2011’s award-winning Sri Lanka’s Killing Fields- channel Setanta Sports News as Editor-in-Chief. produced by ITN for Channel 4.
Cristina Nicolotti Squires Mark Browning Editor, Channel 5 News Managing Director, ITN Productions
Cristina was appointed in October 2013 after almost 20 Mark joined ITN in 2009 as Commercial Director of ITN’s years at ITV News. Joining ITN in 1994, Cristina soon be- digital division before launching ITN Productions in 2010. came a national News Editor for ITV News, rising to Head Since then he has overseen its growth by expanding the of Home News. She then moved into production rising to business into television, sport, commercials, corporate, Head of Output and Assistant Editor. Cristina has worked and digital production. Prior to ITN, Mark had an exten- on coverage of every British and US election since 1994 and sive career in radio, culminating in becoming Programme travelled extensively round the world with ITV News cor- Director at Heart 106.2. respondents. In her time at ITN, she’s been part of teams winning RTS Programme of the Year for News at Ten in 2011 and the BAFTA for coverage of the Haiti earthquake.
19 MANAGEMENT TEAM
Andy Williams Melanie Tansey Managing Director, ITN Source Director of Human Resources
Melanie Tansey joined ITN in 2010 and is responsible for Andy was appointed MD of ITN Source in 2012 following providing strategic and operational leadership to the HR a successful period as acting Managing Director. With a department, ensuring that it actively contributes to busi- strong commercial track record, Andy manages the day- ness goals. She has previously held a succession of senior to-day operations of ITN Source which includes overseeing HR roles at IT giant Hewlett Packard, which she joined in content, sales, marketing and international teams. 2001.
Sarah Vaughan-Brown Keith Cass Director of Corporate Communications Director of Technology
Sarah joined ITN in November 2008 and is responsible for Keith’s role is to ensure ITN remains at the cutting edge driving the company’s PR strategy and corporate profile, of technology, evaluating new systems that come on the as well as internal communications and public affairs. She market and overseeing any technology development in- previously spent more than a decade at Trinity Mirror plc, house. Keith joined ITN in 1980 and has been part of ITN’s latterly as Head of Public Relations, where she oversaw senior management team since 1989. He became Director communications across the group’s portfolio of media of Technology in 2002. brands. In March 2014 Keith will step down from his role, bringing an end to his ITN career after 34 years.
20 OUR PERFORMANCE
21 CHIEF EXECUTIVE’S REVIEW
2013 was a year of continued pro- growing client portfolio. Our output gress for ITN, with improved finan- has simply never been better, with 43 “We look ahead cial performance right across the coveted industry awards during the business in the fourth consecutive period as testament to this success. to the next stage year of sustained profit growth. Most significantly, every part of ITN of ITN’s evolution is now profitable for the first time in Amid the sharp losses of 2009, we re- ITN’s recent history. with a renewed focused the company on a clear stra- confidence and tegic mission, streamlining our oper- ations to deliver excellence in TV news “World-class, distinctive ambition.” while exploiting commercial opportu- journalism” nities arising naturally from our core John Hardie capabilities. World-class, distinctive, independ- Four years on, ITN is a far stronger ent journalism is the DNA of ITN and Chief Executive and more enterprising company than remains the foundation of what we it was before, securing a raft of prof- do – with broadcast news provision itable new business, turning around representing 75% of revenue in 2013. loss-making activities and building a We are pleased to have continued to
YouTube recommissioned digital journalism channel Truthloader
22 Channel 4 News shone a spotlight on the agony of civil war in Syria grow our strong core business with programmes such as The Police’s Productions’ credentials as a serious profitability up in absolute terms, re- Dirty Secrets making the headlines. player in digital sports production. flecting the winning back of the Chan- And while we continue to lead the We have turned around the previous nel 5 News contract and improving market in special one-offs and fast conference TV business by replac- margins. Moreover, our newsroom turnaround content, popular factual ing it with Industry News, providing activities are now increasingly sup- series such as Harrow for Sky1, Motor high-quality corporate programming ported by the growing profitability of Morphers for Channel 5 and Antiques for companies in major trade associ- our commercial divisions - a result of House for Sky Arts demonstrates that ations across sectors such as bank- smart diversification within the wider ITN is about much more than news ing, health and transport. Another business, evolving from our roots in TV and current affairs. Ground-breaking big growth area is in TV commercials, news. citizen journalism channel Truthload- with campaigns spanning some huge er was one of very few to be recom- brands advertising around the big- “ITN Productions continues missioned by YouTube after racking up gest shows on TV such as Continental, to make great strides” almost half a million subscribers and Barclays and Churchill Insurance. We over 22m hits. But the biggest digital were hailed across ad-land too for the win came with the News UK deal to multi award-winning TA Live ads from Our fastest growing division ITN Pro- produce in-game Premiership football Helmand Province in Afghanistan - ductions continues to make great clips and highlights for The Sun, The something never done before. strides - with its broadcast production Times and The Sunday Times online While our news operations remain slate up to 134 hours from seven in and mobile platforms, reinforcing ITN central, much of our profit growth will 2009, major new digital contracts, and come from ITN Productions – in the 23 TV ad campaigns produced during three distinct categories of Broadcast 2013. All this amounted to the division Production, Corporate Production and being short-listed for the second year Digital News Supply. In 2014, we plan in a row for Independent Production to expand those and make first signif- Company of the Year – a significant icant steps in tapping into the large achievement by any measure, only international markets. three years since its inception. With seven major series airing in 2013 “The largest ever archive including ITV’s flagship show, The Agenda, ITN Productions’ flourishing deal in ITN’s history” broadcast client base includes all the major UK broadcasters - ITV, Channel It was a landmark year for ITN Source 4, Channel 5 and Sky 1 with upcoming with the largest ever archive deal in commissions announced with the BBC ITN’s history, signed with the Qatar - as well as Discovery and the History Foundation. This multi-million pound Channel among others. Our Dispatch- contract for 110 hours of footage sees es contract was renewed again with 3, 000 clips from the ITN and Reuters
Cristina Nicolotti Squires was appointed as Editor of Channel 5 News 23 The ITV News livestream website went from strength to strength
archives now forming a new histor- topical news strands to connect with to the unreported massacre in al-Bay- ic news film collection hosted in the its heartland viewers - ranging from da, Channel 4 News was there. Expos- Qatar National Library. Other nota- series about the high street to immi- ing racism in Greece, highlighting the ble highlights include new deals to gration. plight of thousands of displaced Ro- manage and represent the Reuters For the first time since 1997, the Chan- hingya in Thailand to shocking reports archive, as well as to represent NBC nel 5 News presenter went back be- from the Central African Republic. News content in a number of territo- hind the desk in a new set and indeed ries. a new format for its distinctive 6.30pm “RTS Programme Archive sales are now profitable, with bulletin. It was all change at the top efficient digital sales and distribution too, as Cristina Nicolotti-Squires took of the Year” as a result of Project Digital Archive. the helm - the only woman now edit- We continued to build on this success ing UK network news. Closer to home, agenda-setting ex- by rolling out a new ‘broadcast quality’ The team also delivered above and be- clusives such as the dogged pursuit digital delivery service during the year. yond its news commitments producing for truth about ‘Plebgate’, the Rupert With ITN’s unique position as supplier news specials and working with ITN Murdoch tape and investigation into to all three commercial Public Service Productions to co-produce fast turna- Lord Rennard dominated the front Broadcasters restored in 2012, the round documentaries on the Philpott pages. second year of Channel 5 News back case and Ohio slave girls – a great ex- Thriving under Ben de Pear’s editor- in the fold delivered its full comple- ample of cross-ITN collaboration. ship, the programme earned right- ment of profit. Another twelve months of feisty, pas- ful praise as “the must-see show for sionate, brave journalism exempli- opinion formers”. The award-winning “a new format “ fied why Channel 4 News retained its online team also continued to inno- crown as RTS Programme of the Year vate, echoing Channel 4 News’ robust The programme led the agenda on on- for the second consecutive year. and cheeky personality to a growing line abuse with an exclusive interview From shining a spotlight on human digital audience. with the parents of April Jones call- rights abuses in Sri Lanka, charting The bedrock of ITN is ITV News. With ing for the PM to act on abuse images Syria’s descent from a British Jihadi a redesigned studio and set, on air online. Indeed, 2013 saw a focus on fighter, the agony of Aleppo’s children graphics and theme tune, the pro-
24 Sky1 commissioned Harrow: A Very British School from ITN Productions
gramme enjoyed a year of indus- increased traffic six fold making it a – passionate, driven, entrepreneurial, try plaudits with audience share up brand leader in online news provision. creative, inspiring individuals who un- across all bulletins. Breaking major stories ahead of the derpin our success. competition, it went on to win both an 2013 was a year of significant achieve- “the biggest breaking Online Media Award and a prestigious ment as we continued to build the Broadcast Digital Award. financial strength of the underlying story this year” business with a solid platform for “a brand leader in online future growth. We look ahead to the The RTS award-winning UK bureau next stage of ITN’s evolution with a set the pace on the biggest breaking news provision” renewed confidence and ambition. story this year – the violent and unpro- voked attack on Drummer Lee Rigby, It was a period of change behind the broadcasting the defining images of scenes as we welcomed new leader- that day and arguably the defining im- ship to the newsroom. Editor Geoff age of the current phase of “lone wolf” Hill joined from Channel 5 News as terrorism. the year drew to a close, following the Whether it was the eye-opening series departure of Deborah Turness to take from Bangladesh, live anchoring and over as President of NBC News. reporting on Typhoon Haiyan, a run of Most poignantly, generations of sought-after interviews on the Stu- the ITN family were reunited as we art Hall case, critically acclaimed live marked the 10th anniversary of the special coverage of the election of the tragic losses of Terry Lloyd, Fred Ner- Pope and the birth of Prince George, ac, Hussein Osman and Gaby Rado - and the team’s ongoing dedication to a timely reminder of the dangers our covering the conflict in Syria - all made people face day in and day out to bear for consistently outstanding coverage. witness in some of the world’s most The ITV News livestream celebrated hostile places. Because of course the John Hardie, its first anniversary with news it had driving force behind ITN is our people Chief Executive
25 CHAIRMAN’S STATEMENT
“The Company has built the right platform for long- term sustainable growth”
Maggie Carver
Chairman
In another year of achievement for and innovating across the business, done within the wider media sector to ITN, I am pleased to report that the while implementing tighter cost con- effect positive change, using its posi- Company has again delivered a trols within the Group. tion as supplier to all three commer- strong set of financial results. Our management team continues to cial Public Service Broadcasters to The fourth successive year of prof- be incentivised to deliver growth, with lead a number of important industry it growth saw good progress against a new Long Term Incentive Plan put in campaigns. Most notably, our efforts our strategic objectives, as a result of place by the Board, based on the de- saw the introduction of filming in the the successful re-engineering of the livery of challenging profit targets and Court of Appeal for the very first time business following the losses of 2009. due to be paid out in 2016. in 2013, overturning a near 100-year ban on cameras in court. Operating profit before exceptional ITN takes its obligations to its pen- items grew by £1.3m to £5m, despite sioners - both existing and future - The Board remains confident that the a 3% reduction in turnover. Also, af- very seriously. We continue to fund the Company has built the right platform ter payment to the pension recovery pension deficit in accordance with a for long-term sustainable growth and plan, cash balances of £8.6m were up manageable funding schedule agreed is well placed - strategically, manage- £0.6m on 2012. with the Trustees. rially and financially - to capitalise on new opportunities. An impressive leadership team along- In 2013, cash flow exceeded payments side a highly committed and skilled under the agreed recovery plan for the For the future we are confident in our workforce continued to build and first time since the deficit emerged. strategy of building new products and broaden our activities so ITN is now The pension deficit also benefitted business on the foundation of core a fundamentally stronger company, from the positive impact of the pen- news contracts. both financially and operationally. sion increase exchange exercise com- We would like to thank all of our tal- With a clear strategy in place, this pleted during the year. In addition, ented colleagues at ITN for their hard improved performance has been proceeds from the sale of Espresso work, drive and determination in get- achieved by driving margins in our funded a one-off contribution to the ting us to where we are today. core activities, winning profitable new scheme. We look forward to reporting on further contracts in our commercial divisions We are also proud of the work ITN has progress in 2014 and beyond.
26 ACCOUNTS
27 Independent Television News Limited / Annual Report and Accounts 2013
STRATEGIC REPORT
The principal activity of Independent Television News Limited (the “Company”) and its subsidiaries is to provide high quality national and international daily scheduled television news programming to UK broadcasters. ITN also provides short and long form programming, on-the-day and archive material, digital production services, commercial video production and provision of technical and production facilities to third parties. The Companies Act 2006, requires the Company to set out in this report a fair review of the business of Independent Television News Limited and its subsidiaries (“the Group” or “ITN”) during the year ended 31 December 2013, including an analysis of the Group’s position at the end of the financial year. The information that fulfils these requirements in conjunction with this Strategic Report, can be found in the Chairman’s Statement and the Chief Executive’s Review of the Annual Report and Accounts.
Business review The Group has achieved another year of strong profit growth. Operating profit before exceptional items increased 33% to £5.0 million (2012: £3.7 million). Profit before tax increased by £5.0 million to £6.6 million (2012: £1.6 million) largely due to a number of significant non-operating items.
Operating businesses ITN revenues decreased by 3% to £105.8 million (2012: £108.7 million). News revenues decreased 3% to £79.8 million (2012: £82.0 million) due to reduced one off programming and cost reductions which in turn have led to margin improvements. Revenues from other businesses decreased by 2% to £26.0 million (2012: £26.7 million). In the prior year, other business revenue included ITN Consulting, which closed in 2012. On a comparable basis, other business revenue decreased £0.1m primarily due to non-recurring revenue in ITN Source from major events in 2012 such as the Olympics and the Diamond Jubilee. Operating profit before exceptional items increased by £1.3 million, primarily due to the improved margin on the news provision contracts, improved margins in non-news businesses, the closing of the loss-making ITN Consulting in 2012 and continued careful cost management. ITN News has built a strong reputation as the UK’s leading commercial supplier of independent broadcast news, delivering powerful, authoritative, world-class coverage, reaching more than eight million people every day. From Syria’s civil war to the Woolwich terrorist attack, deadly Typhoon Haiyan to Superstorm St Jude, the passing of Nelson Mandela to the birth of a new Prince, our teams across ITV News, Channel 4 News and Channel 5 News consistently shone with award-winning, agenda-setting journalism and trusted analysis. Enterprising and revelatory reporting included investigations into “Plebgate”, the plight of Bangladesh factory workers and the Lord Rennard exposé. The ITN Productions business has built on its 2012 performance, generating profit growth and margin improvement, with new business wins and innovative product offerings. In Broadcast, The Agenda and Dispatches continue to go from strength to strength, whilst new series such as Harrow: A Very British School for Sky1 were produced in the year. Our Digital business won a significant contract with News UK to produce Premier League football clips and highlights for The Sun, Times and Sunday Times, whilst our corporate conference programming business (“Industry News”) continues to grow. The TV Commercials business has also expanded with 23 ad campaigns in 2013, including the multi- award-winning Territorial Army live ads from Helmand Province. ITN Source results were impacted by the non-recurrence of the major events of 2012 which impacted on the day and archive clip sales. However, new business continues to be generated and in the year a contract was won to produce a historical news and film collection for the Qatar Foundation, with the first phase being delivered by year end and the remainder to be delivered in 2014. The Reuters Archive management contract was also renewed in the year.
Other items Exceptional operating items of £2.3 million (2012: nil) have been recognised in the year. An exceptional net settlement gain of £2.8 million was recognised in relation to a Pension Increase Exchange exercise which occurred during the year. Further information is provided in Note 6 and Note 17 of the Accounts. This was offset by an exceptional onerous lease provision of £0.5 million (2012: nil) in relation to vacant property. Further information is provided in Note 6 of the
28 Independent Television News Limited / Annual Report and Accounts 2013
STRATEGIC REPORT
Accounts. Due to their material nature on the results of the business they have been highlighted as exceptional items. The Group sold its investment in Espresso Group Limited for £2.5 million in cash, generating a profit on disposal of £0.7 million. Further information is provided in Note 7 of the Accounts. As a result of this disposal, ITN made an addi- tional contribution of £2.3 million to the ITN Defined Benefit Pension Scheme (the “ITN Pension Scheme”) in excess of the funding agreement with the Trustees. Other finance costs reduced by £1.2 million to £1.3 million (2012: £2.5 million) during the year. The finance costs relate to the ITN Pension Scheme which is closed to future accrual. The accounting deficit on the ITN Pension Scheme at 31 December 2013 reduced to £80.4 million (2012: £88.8 million) and further information is provided at Note 17. The deficit has decreased due to the exceptional settlement gain, funding contributions and the actuarial gain on assets more than offsetting the actuarial loss on liabilities caused by increased inflation rate assumptions.
Cash management At 31 December 2013, ITN had £8.6 million of cash, up £0.6 million on the prior year. Increased operating profitability and continued focus on working capital management has enabled ITN to generate cash in excess of its funding obligations to the ITN Pension Scheme.
Risk management and internal controls
The Board has overall responsibility for the Group’s systems of internal control and risk management and for reviewing their effectiveness. The Executive Directors and management are responsible for implementing risk and control policies and providing assurance on compliance with these policies. The Group continues to take steps to embed internal control and risk management in the operations of the business, as areas for improvement come to the attention of the Board and management.
During 2013, senior management reviewed and updated the Business Risk Register which was subsequently reviewed and approved by the Board. This review included collating all relevant risks for all parts of the business; assessing the likely impact and likelihood of each risk; ranking the risks in order of potential effect on the Group and identifying current mitigating activities being undertaken and additional mitigating actions that should be undertaken.
Principal risks and uncertainties a) Financial Risks
ITN Pension Scheme funding risk The ITN Pension Scheme has a significant funding deficit as detailed in Note 17 of the Accounts. There is a risk of financial insolvency if the deficit cannot be managed. The Company has agreed a recovery plan with the Scheme Trustees as part of the 31 December 2011 Triennial Actuarial Valuation. In addition, the ITN Pension Scheme has been closed to future accrual since 31 March 2010 and a Pension Increase Exchange was offered to pensioners during the year ended 31 December 2013. The Company, in conjunction with the Trustees, continues to evaluate options to reduce the risk further.
Reliance on key contracts The Company generates a substantial portion of its revenue from a number of key customers. Damage to or loss of any of these relationships could have a direct and potentially material effect on the Company’s results. The Company enters into long-term contracts with its key customers which mitigate the risk. At the time of the 2013 Annual Report and Accounts being signed, there is no long term contract in place with one of the Company’s key customers, ITV. However, the Board has every expectation of a new multi-year contract being formally agreed in the very near future. Board members and the Executive Team regularly meet with key customers and review the relationships to ensure that the Company continues to meet their respective needs.
29 Independent Television News Limited / Annual Report and Accounts 2013
STRATEGIC REPORT
Exposure to credit, liquidity and foreign exchange risk The Group’s principal financial assets are bank balances, cash, trade and other receivables. The Group’s credit risk is primarily attributable to its trade receivables which are principally due from major broadcasters thereby reducing recovery risk. Liquid funds are held with financial institutions that are regularly reviewed by the Treasury function. There is a risk that there are insufficient funds available for ongoing operations and future developments. The Group manages its exposure by continuously monitoring short and long-term forecasts and actual cash flows to ensure sufficient funds are available. The Group’s activities currently do not significantly expose it to the financial risks of changes in foreign currency exchange rates and there is a degree of operational hedging with revenues and costs arising in foreign currencies through the operation of the ITN Source business overseas and overseas news bureaux.
b) Reputational Risks
Damage to journalistic reputation ITN’s reputation for journalistic integrity could be damaged if news sources are not correctly vetted, there is a major editorial error or regulatory breach or ITN is perceived as failing to produce accurate and impartial news. ITN has a strict internal compliance process, with the aim of minimising and mitigating legal compliance exposure and reputational risk. The Group has an internal compliance team supported by external legal counsel. All employees and contract staff are briefed on and required to read the Group’s Compliance Manual as part of their induction and this is periodically updated and reissued. Staff are provided with regular compliance training.
Failure or interruption of or denial of access to broadcast or information technology systems and infrastructure The Group’s ability to meet its requirements under its broadcast, production and archive supply agreements is dependent on the Group’s broadcast and information technology systems. Any system interruption due to incidents such as denial of access attacks, infrastructure failure or damage could seriously impact the Group’s ability to meet these requirements. A cyber / viral attack or hijack of social media could also cause prolonged system denial, loss of intellectual property or substantial damage to the reputation of ITN. The Group has business continuity and disaster recovery plans in place and these are regularly reviewed. In addition, the Group regularly reviews the security of its systems and has security protocols and procedures in place.
c) People Risks
Loss of key personnel The performance of the Group depends on its ability to continue to attract, motivate and retain key staff. The loss of key personnel could impact the Group’s ability to operate effectively or result in a loss of knowledge and experience. The Executive Management and Remuneration Committee monitor the levels and structure of remuneration for senior management and seek to ensure that they are designed to attract, retain and motivate talent. The Group aims to provide conditions for fulfilling careers for all employees through remuneration and benefits and career development opportunities.
Financial controls The Company has established a framework of internal financial control, the key elements of which are: • The Board has responsibility for approving the overall Group and Company strategy, for approving revenue and capital budgets and quarterly forecasts and determining plans for the financial structure of the Company and Group. Monthly results and variances from budgets and forecasts are reported to the Board monthly. • There is a comprehensive process for performing annual strategy reviews and budgeting and quarterly forecasting.
30 Independent Television News Limited / Annual Report and Accounts 2013
STRATEGIC REPORT
There is an organisational structure with clearly defined lines of responsibility and approval controls identifying transactions requiring Board approval. The CFO has responsibility for functional leadership and development of the Company’s finance activities.
Non-financial controls The Company has established a wide range of non-financial controls covering areas such as legal and regulatory compliance, anti-bribery, health and safety, employment and business continuity. The effectiveness of these is reviewed by the Management Team and the Board and through the quarterly senior management Compliance Meeting.
Employees The Group employs 704 people, in addition to freelance staff who are contracted on specific projects. These individuals are key to the Group’s success. The Group firmly believes in creating a working environment that is free from all kinds of discrimination and harassment and will not permit or tolerate discrimination in any form. ITN is an active member of the Creative Diversity Network. The importance of staff training is recognised at all levels, with training programmes being focussed on giving staff the skills they need to effectively perform their roles and develop their careers, whilst ensuring there is a pipeline of talent within the Group The Group regularly communicates with its staff through news e-mails, an intranet site, noticeboards and a quarterly magazine. In addition, regular meetings are held within departments as well as ad hoc Group wide ‘town hall’ meetings.
Approved by the Board and signed on its behalf by
J H Scorer Secretary 3 April 2014 200 Gray’s Inn Road London WC1X 8XZ
31 Independent Television News Limited / Annual Report and Accounts 2013
DIRECTORS’ REPORT
The directors of Independent Television News Limited (the “Company”) present their Annual Report together with the audited accounts of Independent Television News Limited and its subsidiaries (the “Group” or “ITN”) for the year ended 31 December 2013. The Strategic Report contains disclosures in relation to principle risks and uncertainties and employees.
Board of Directors The Board consists of two Executive Directors and five Non-Executive Directors who are detailed below, with biographical details provided on pages 17 and 18. All the Directors served throughout the period.
Executive Directors J M Hardie B R Martin
Non-Executive Directors M A M Carver (Chairman) G W Linnebank M D Stewart S J Pitts A S Garard T M Betts (alternate to A S Garard)
The Board The Board’s primary tasks are the setting of the Group’s overall strategy, the enhancement of shareholder interests, the approval of revenue and capital plans, the maintenance of controls to ensure effective operations, oversight of con- trols, audit and risk management, the approval of accounts and the review and approval of remuneration policies. The Board is committed to appropriate standards of corporate governance. The Board meets for scheduled meetings regularly throughout the year. To enable the Board to perform its duties, the directors have full access to all relevant information and to the services of the Company Secretary.
The Audit Committee The Audit Committee currently comprises all Non-Executive Directors with M A M Carver as Chairman and meets at least once a year. The Committee reviews the Group’s annual financial statements before submission to the Board for approval. The Committee also reviews reports from the external auditors on accounting and internal control matters. Where appropriate, the Committee monitors the progress of action taken in relation to such matters. The Committee also recommends the appointment and reviews the fees of the external auditors.
The Remuneration Committee The Remuneration Committee currently comprises all Non-Executive Directors with G W Linnebank as Chairman. The Committee does not retain a firm of remuneration consultants, but may seek professional advice on an ad hoc basis. In determining the remuneration packages of the Executive Directors, the Committee has regard to the importance of recruitment, motivation and retention of quality management. Base salary and benefits are determined on an annual basis by the Committee after a review of the individual’s performance, Group performance, market trends and the UK inflation rate. For guidance, the Committee has regard to available research and published remuneration information on comparable companies. Benefits include the Company pension scheme; salary security and disability cover; health insurance and death in service cover. The value of such benefits is not pensionable.
32 Independent Television News Limited / Annual Report and Accounts 2013
DIRECTORS’ REPORT
The Executive Directors participate in a Long Term Incentive Plan to promote longer term performance and retention, which is contingent on aggregate profit exceeding certain targets for the three years ended 31 December 2015. This is consistent with the previous Long Term Incentive Plan. Further information is provided in Note 5 of the Accounts, Staff Costs and Directors’ Remuneration.
Supplier payment policy It is the Company’s policy to agree terms of payment prior to commencing trade with any supplier and to abide by those terms based on the timely submission of satisfactory invoices. Trade creditor days of the Company for the year ended 31 December 2013 were seven days (2012: nine days), based on the ratio of Company trade creditors at the year end to the amounts invoiced during the year by trade creditors.
Charitable and political contributions During the year the Group made charitable donations of £25,000 (2012: £25,000) relating to charities associated with journalism. There were no political donations.
Dividends The directors do not recommend the payment of a dividend (2012: £nil).
Going concern After making enquiries and considering the uncertainties described in detail in Note 1 in the Accounts, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. Further details regarding the adoption of the going concern basis can be found in the Statement of Accounting Policies in the Accounts.
Statement on disclosure of information to auditors
Having made the requisite enquiries, as far as each of the directors is aware, there is no relevant information (as defined by Section 418 of the Companies Act 2006) of which the Company’s auditors are unaware, and each of the directors has taken all steps they should have taken as a director to make themselves aware of any relevant audit information and to establish that the Company’s auditors are aware of the information.
Auditors Deloitte LLP have expressed their willingness to continue in office as the Company’s auditor and a resolution to re-appoint them will be proposed at the forthcoming Annual General Meeting.
Approved by the Board and signed on its behalf by
J H Scorer Secretary 3 April 2014 200 Gray’s Inn Road London WC1X 8XZ 33 Independent Television News Limited / Annual Report and Accounts 2013
ACCOUNTS
Statement of Directors’ Responsibilites
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under Company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • state whether applicable UK Accounting Standards have been followed; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
34 Independent Television News Limited / Annual Report and Accounts 2013
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Independent auditor’s report to the members of Independent Television News Limited
We have audited the financial statements of Independent Television News Limited for the year ended 31 December 2013 which comprise consolidated Profit and Loss Account, the Consolidated and Company Balance Sheets, the Consolidated Cash Flow Statement, the Consolidated Statement of Total Recognised Gains and Losses and the related notes 1 to 24. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group’s and the parent company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements In our opinion the financial statements: • give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2013 and of the group’s profit for the year then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
35 Independent Television News Limited / Annual Report and Accounts 2013
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Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or • the parent company financial statements are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit
Mark Lee-Amies (Senior Statutory Auditor) for and on behalf of Deloitte LLP Chartered Accountants and Statutory Auditor London, United Kingdom
4 April 2014
36 Independent Television News Limited / Annual Report and Accounts 2013
ACCOUNTS
Consolidated profit and loss account Year ended 31 December 2013
2013 2012 Notes £’000 £’000
Turnover 3 105,829 108,739
Cost of sales (86,639) (90,774) Gross profit 19,190 17,965
Administrative expenses (11,950) (14,230) Other administrative expenses (14,232) (14,230) Exceptional administrative items 2,282 -
Operating profit on ordinary activities before 4 7,240 3,735 interest and taxation Operating profit on ordinary activities before 4,958 3,735 interest, taxation and exceptional items Exceptional Items 6 2,282 -
Profit on disposal of fixed asset investments 7 681 - Income from other fixed assets investments 8 452 435 Share of losses in joint venture and associate undertakings (336) -
Interest receivable and similar income 13 31 Interest payable and similar charges 9 (132) (155) Other finance costs 9 (1,314) (2,494)
Profit on ordinary activities before taxation 6,604 1,552
Tax charge on ordinary activities 10 (1,839) (464)
Profit for the financial year 4,765 1,088
The movement on reserves is set out in Note 19 to the accounts. A consolidated statement of total recognised gains and losses is set out on page 41. All activities are continuing. The accompanying notes are an integral part of this consolidated profit and loss account.
37 Independent Television News Limited / Annual Report and Accounts 2013
ACCOUNTS
Consolidated balance sheet As at 31 December 2013
2013 2012 Notes £’000 £’000
Fixed assets Tangible assets 11 8,580 9,692 Investments 12 500 2,418 9,080 12,110
Current assets Debtors 13 21,800 19,425 Cash at bank and in hand 8,609 8,041 30,409 27,466
Creditors: amounts falling due within one year 14 (29, 086) (28,429)
Net current assets / (liabilities) 1,323 (963) Total assets less current liabilities 10,403 11,147
Creditors: amounts falling due after more than one year 15 (118) (352) Provisions for liabilities 16 (3,629) (2,732) Net assets excluding pension liability 6,656 8,063
Pension liability 17 (64,306) (68,420) Net liabilities including pension liability (57,650) (60,357)
Capital and reserves Called-up share capital 18 400 400 Profit and loss account 19 (58,050) (60,757) Shareholders’ deficit 20 (57,650) (60,357)
The accompanying notes are an integral part of this consolidated balance sheet. The financial statements of Independent Television News Limited (registered number 548648) were approved by the Board of Directors on 3 April 2014. Signed on behalf of the Board of Directors
B R Martin Director 3 April 2014
38 Independent Television News Limited / Annual Report and Accounts 2013
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Company balance sheet As at 31 December 2013
2013 2012 Notes £’000 £’000
Fixed assets Tangible assets 11 8,580 9,692 Investments 12 490 2,072 9,070 11,764
Current assets Debtors 13 21,765 20,003 Cash at bank and in hand 7,967 7,520 29,732 27,523
Creditors: amounts falling due within one year 14 (28,255) (28,140)
Net current assets / (liabilities) 1,477 (617) Total assets less current liabilities 10,547 11,147
Creditors: amounts falling due after more than one year 15 (118) (352) Provisions for liabilities 16 (3,629) (2,732) Net assets excluding pension liability 6,800 8,063
Pension liability 17 (64,306) (68,420) Net liabilities including pension liability (57,506) (60,357)
Capital and reserves Called-up share capital 18 400 400 Profit and loss account 19 (57,906) (60,757) Shareholders’ deficit 20 (57,506) (60,357)
The accompanying notes are an integral part of this Company balance sheet The financial statements of Independent Television News Limited (registered number 548648) were approved by the Board of Directors on 3 April 2014. Signed on behalf of the Board of Directors
B R Martin Director 3 April 2014
39 Independent Television News Limited / Annual Report and Accounts 2013
ACCOUNTS
Consolidated cash flow statement Year ended 31 December 2013
2013 2012 Notes £’000 £’000
Net cash inflow from operating activities 21 350 7,331
Returns on investments and servicing of finance Income from fixed assets investments 452 435 Net proceeds from disposal of fixed asset investment 7 2,424 - Interest received 13 31 Interest paid - (31) Interest element of finance lease and hire purchase rentals [25] [14] Investment in joint ventures 12 (200) (100) Loan to joint ventures (55) - Net cash inflow from returns on investments and servicing of 2,609 321 finance
Taxation UK corporation tax received - 2
Capital expenditure and financial investment Acquisition of tangible fixed assets (2,224) (3,011) Sale of tangible fixed assets 55 5 Net cash outflow from capital expenditure and financial (2,169) (3,006) investment
Cash inflow before financing 790 4,648
Financing Drawdown of loan 22 - 700 Repayment of loan 22 - (2,796) Issue of finance lease - 402 Capital element of lease payment (222) (90) Net cash outflow from financing (222) (1,784)
Increase in cash in the year 22 568 2,864
The accompanying notes are an integral part of this consolidated cash flow statement.
40 Independent Television News Limited / Annual Report and Accounts 2013
ACCOUNTS
Consolidated statement of total recognised gains and losses Year ended 31 December 2013
2013 2012 Note £’000 £’000
Group profit for the financial year 4,765 1,088 Actuarial gain / (loss) relating to the pensions scheme 17 435 (8,096) Deferred tax on attributable pension scheme liabilities (1,329) 1,269 Current tax attributable to pension scheme contributions 1,226 740 Effect of decrease in tax rate on deferred tax asset on pension liability (2,390) (1,777) Total recognised gains / (losses) relating to the year 2,707 (6,776)
The profits for 2013 and 2012 are reported under the historical cost convention. The accompanying notes are an integral part of this consolidated statement of recognised gains and losses.
41 Independent Television News Limited / Annual Report and Accounts 2013
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Consolidated statement of total recognised gains and losses Year ended 31 December 2013
1. Statement of accounting policies A summary of the principal accounting policies of the Group is set out below, all of which have been applied con- sistently throughout the current and preceding year.
Going concern The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Directors’ Report. The Group made a profit after tax of £4.8m in the year to 31 December 2013. It had net current assets of £1.3m. The Group’s activities are funded out of operating cash flows arising from its contracts with broadcasters. At 31 December 2013, the ITN Pension Scheme had a deficit under Financial Reporting Standard 17 “Retirement Benefits” of £80.4 million (Note 17). The triennial actuarial valuation of the scheme at 31 December 2011 and associated recovery plan have been agreed with the Trustees of the ITN Pension Scheme. The directors believe that the associated agreed funding plan enables the Company to make appropriate contributions to the Scheme to reduce the deficit whilst continuing to grow the business. At the time of these 2013 accounts being signed there is no long term contract in place with one of the Compa- ny’s key customers, ITV. However, the Board has every expectation of a new multi-year contract being formally agreed in the near future. After making enquiries, and considering the uncertainties described above, the directors have a reasonable ex- pectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. For these reasons, the going concern basis continues to be adopted in preparing the Annual Report and Accounts.
Basis of consolidation The Group accounts consolidate the accounts of Independent Television News Limited and its subsidiary under- takings up to 31 December each year. The results of subsidiaries acquired or sold are consolidated for the peri- ods from or to the date on which control passed. Acquisitions are accounted for under the acquisition method. The Group’s investment in associates and joint ventures is accounted for by recognising the Group’s share of the post-acquisition profit and losses. If the Group’s share of losses in an associate or a joint venture equals its investment, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate, in which case a provision is recognised.
Basis of accounting The accounts are prepared under the historical cost convention and in accordance with applicable United King- dom accounting standards.
Turnover Group turnover comprises the value of sales (excluding VAT and similar taxes and intra group transactions) of services in the normal course of business. Turnover represents, in the case of long-term contracts, the proportion of the contract value applicable to the ac- tivity in the period, ascertained by reference to the extent to which contractual obligations have been carried out. Programme and Archive material income is recognised in line with the specific licence agreement or on delivery of the product.
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Investments Fixed asset investments are stated at cost less any provision for impairment.
Tangible fixed assets Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment. Depreciation is provided on all tangible fixed assets, at rates calculated to write-off the cost of tangible fixed assets over their expected lives on a straight line basis. The rates applicable are:
Fixed plant and equipment Lower of useful economic life (between 5 and 10 years) or lease term Office and technical equipment Lower of useful economic life (between 1 and 10 years) or lease term Motor vehicles 4 years
Under the news provisions contracts, the broadcasters may contribute funds for the purchase of necessary equipment. Such assets are capitalised and amortised over the expected useful economic life. Capital contri- butions received from broadcasters to fund the expenditure, are included in accruals and deferred income when received or receivable from the broadcaster and credited to the profit and loss account over the expected useful economic life of the relevant asset.
Assets under construction will be held at cost less any impairment losses and will be added to the relevant pool and depreciated once the asset is available for use.
Foreign currency Transactions denominated in foreign currencies are recorded in the local currencies at prevailing exchange rates. Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange at the balance sheet date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the profit and loss account.
Taxation Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recov- ered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Taxable losses have been incurred by the Group and have been recognised as the directors are of the opinion that it is more likely than not these will be available for offset against future taxable profits of the Company or will be recoverable through consortium or group tax relief in the future. Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the bal- ance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the Group’s taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements. A net deferred tax asset is regarded as recoverable and therefore recognised only to the extent that, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. The deferred tax asset is rec- ognised as the directors are of the opinion that it is more likely than not that there will be suitable taxable profits in the future from which the reversal of the underlying timing difference can be deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing
43 Independent Television News Limited / Annual Report and Accounts 2013
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differences are expected to reverse based on tax rates and laws that have been enacted or substantively enact- ed by the balance sheet date. Other than where deferred tax is indirectly discounted due to calculations on an already discounted pension liability, deferred tax is measured on a non-discounted basis. Leases Assets held under finance leases and other similar contracts, which confer rights and obligations similar to those attached to owned assets, are capitalised as tangible fixed assets and are depreciated over the shorter of the lease terms and their useful lives. The capital elements of future lease obligations are recorded as liabilities, while the interest elements are charged to the profit and loss account over the period of the leases to produce a constant rate of charge on the balance of capital repayments outstanding. Hire purchase transactions are dealt with similarly, except that assets are depreciated over their useful lives. Rentals under operating leases are charged on a straight-line basis over the lease term, even if payments are not made on such a basis. Benefits received and receivable as an incentive to sign an operating lease are sim- ilarly spread on a straight-line basis over the lease term, except where the period to the review date on which the rent is first expected to be adjusted to the prevailing market rate is shorter than the full lease term, in which case the shorter period is used.
Pensions With effect from 31 March 2010, the Group closed the ITN Pension Scheme to future service accrual. Subse- quently the Group provided pensions to all members of staff from 1 April 2010 through a defined contribution stakeholder scheme. The interest cost and expenses to the fund which are netted against the expected return on assets are shown as a net amount in other finance costs in the profit and loss statement. Actuarial gains and losses are recognised immediately in the statement of total recognised gains and losses. The defined benefit scheme assets are held separately from those of the Group, in trustee administered funds. Pension scheme assets are measured at fair value and liabilities are measured on an actuarial basis using the projected unit method and discounted at a rate equivalent to the current rate of return on a high quality corporate bond of equivalent currency and term to the scheme liabilities. The resulting defined benefit asset or liability, net of the related deferred tax, is presented separately after other net assets on the face of the balance sheet. The amounts charged to the profit and loss account for the defined contribution scheme are the contributions payable in the period.
Provisions In accordance with Financial Reporting Standard 12 “Provisions, Contingent Liabilities and Contingent Assets”, the Group’s property provisions (see Note 16) have been discounted to the present value of future lease obliga- tions net of estimated sub-lease income and related costs of leasehold property where the space is vacant or currently not planned to be used for ongoing operations. The Group’s Salary security provision (see Note 16) has been discounted to the present value of net payments to staff less any applicable receipts from insurance com- panies. The periodic unwinding of the discount is treated as an imputed interest charge and is disclosed under interest payable and similar charges. Management make an annual assessment of the appropriateness of the assumptions. Any resulting changes in assumptions are charged within administrative expenses in the profit and loss account.
Exceptional Items Exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the Group. They are non-recurring material items of in- come or expense that have been shown separately due to their significance in nature or amount.
44 Independent Television News Limited / Annual Report and Accounts 2013
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2. Parent Company profit and loss account The Company has taken advantage of the exemption in the Companies Act 2006 S.408 not to present its own prof- it and loss account. The Company’s profit after tax for the year was £4,909,000 (2012: profit £1,088,000).
3. Segmental information The principal activity of the Group is to provide daily scheduled television programmes of international and national news to UK broadcasters. The Group and Company also provide short and long form programming, on- the-day and archive material, digital production services, commercial video production, technical and production facilities to third parties. The Group turnover, by geographical destination, is as follows: Turnover by geographical destination:
News Other Total 2013 2012 2013 2012 2013 2012 £’000 £’000 £’000 £’000 £’000 £’000
United Kingdom 79,786 82,036 17,881 16,205 97,667 98,241 Rest of the World - - 8,162 10,498 8,162 10,498 Total 79,786 82,036 26,043 26,703 105,829 108,739
Excluded from the turnover number is £1.3 million relating to ITN’s shareholding in Diagonal View Limited.
4. Operating profit on ordinary activities before interest and taxation The profit on ordinary activities before taxation is stated after charging / (crediting):
2013 2012 £’000 £’000 Depreciation of tangible fixed assets: - owned 3,201 4,911 - held under finance lease 135 133
Profit on disposal of fixed assets (55) (4)
Operating lease rentals - land and buildings 2,995 2,995
Audit and non-audit fees paid to Deloitte LLP - Fees payable to Deloitte LLP for the audit of the Company’s annual accounts 90 89 - The audit of the Company’s subsidiaries pursuant to legislation 14 13 - Other services relating to taxation 67 99 171 201
45 Independent Television News Limited / Annual Report and Accounts 2013
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5. Staff costs and directors’ remuneration Staff costs The average monthly number of persons (including executive directors) employed by the Group during the year was as follows:
2013 2012 No. No.
Number of employees 705 707
The costs incurred in respect of these employees were:
2013 2012 £’000 £’000
Wages and salaries 40,499 39,386 Employers’ national insurance costs 4,113 4,122 Employers’ pension costs - defined contribution stakeholder scheme 3,050 2,971 47,662 46,479
Directors’ remuneration Total Directors Highest paid Remuneration Director
2013 2012 2013 2012 £’000 £’000 £’000 £’000
Salary/fees 700 700 350 350 Annual bonus 456 459 315 315 Pension 35 41 35 35 Other benefits 62 57 26 26 Current year emoluments 1,253 1,257 726 726 Long term incentive plan - 736 - 491
Total remuneration 1,253 1,993 726 1,217
The Remuneration Committee, which includes representation of all the shareholders, has put in place a new Long Term Incentive Plan for 2013 to 2015, which is based on aggregate operating profit reaching certain thresh- olds over the period. Payments under the plan, based on the criteria being met, will be made in 2016. The costs of the plan are being accrued within provisions for liabilities and charges (Note 16) over the performance period based on an assessment of likely pay-out. The 2012 Directors’ remuneration includes amounts paid out in 2013 in relation to the 2010-2012 Long Term Incentive Plan.
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6. Profit on exceptional items
2013 £’000
Net defined benefit pension scheme settlement gain 2,822 Onerous lease provision (540) Profit on exceptional items 2,282
During the year the Company offered the ITN Defined Benefit Pension Scheme pensioners the ability to partici- pate in a pension increase exchange. Due to the magnitude of the settlement gain created it has been classified as an exceptional item. The gain is stated net of associated costs. Refer to Note 17 Pensions for further informa- tion. This was offset by a provision of £540,000 in relation to vacant property. (Note 16 Provisions)
7. Profit on disposal of fixed asset investment
2013 2012 £’000 £’000
Disposal of fixed asset investment: - cash proceeds on disposal of fixed asset investment 2,494 - - investment carrying value (1,782) - - directly associated disposal costs (31) - Profit on disposal of fixed asset investment 681 -
On 31 October 2013, the Group sold its investment in Espresso Group Limited for a consideration of £2,494,000 (£2,424,000 received in cash in the year), leading to the recognition of a profit on disposal. In addition, deferred consideration, up to a maximum of £629,000 which is held in escrow against any future claims or disputes, has not been recognised due to the uncertainty of receipt.
8. Income from other fixed asset investments
2013 2012 £’000 £’000
Dividend received 452 435
47 Independent Television News Limited / Annual Report and Accounts 2013
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9. Interest payable and similar charges / other
2013 2012 Interest payable and similar charges £’000 £’000
Interest on finance leases 26 14 Interest on loan - 31 Unwinding of discount on provisions (Note 16) 105 110 Other 1 - 132 155
2013 2012 Other finance costs £’000 £’000
Net finance costs on defined benefit pension scheme (Note 17) 1,314 2,494
10. Tax on profit on ordinary activities
2013 2012 £’000 £’000 Current tax UK Corporation tax at 23.25% (2012: 24.5%) for the year 904 649 Foreign tax 48 13 Adjustments in respect of prior years: UK corporation tax 130 (13) Total current tax charge 1,082 649 Deferred tax Origination and reversal of timing differences (35) 3 Effect of change in the tax rate 287 176 Charge in respect of pension liability 642 (338) Adjustments in respect of prior years (137) (26) Total deferred tax 757 (185) Total tax charge on profit on ordinary activities 1,839 464
Finance Act 2013, which was enacted on 17 July 2013, provided for a future reduction of the corporation tax to 21%, effective from 1 April 2014, and a further reduction to 20%, effective 1 April 2015. The 20% rate has been reflected in the calculation of deferred tax in these statements.
48 Independent Television News Limited / Annual Report and Accounts 2013
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10. Tax on profit on ordinary activities (continued) The standard rate of current tax for the year, based on the UK standard rate of corporation tax, is 23.25% (2012: 24.5%). The current tax charge (2012: charge) for the year was less than 23.25% (2012 was greater than 24.5%) for the reasons set out in the following reconciliation:
2013 2012 £’000 £’000
Group profit on ordinary activities before tax 6,604 1,552 Tax on group profit on ordinary activities at standard tax rate 1,535 380
Effects of: Expenses not deductible for tax purposes (29) 230 Non-taxable income (174) (300) Depreciation (less than) / in excess of capital allowances (40) 225 Other short-term timing differences (570) 321 Tax losses brought forward (26) (204) Tax losses carried forward 219 - Adjustments to tax charge in respect of previous periods 130 (13) Foreign tax 37 10 Total current tax charge 1,082 649
11. Tangible fixed assets
Fixed Office and plant and technical Motor Assets under equipment equipment vehicles construction Total Group and Company £’000 £’000 £’000 £’000 £’000 Cost At 1 January 2013 6,430 41,891 1,083 450 49,854 Additions 168 1,386 97 573 2,224 Completed Assets 1 449 - (450) - Disposals - (1,202) (320) - (1,522) At 31 December 2013 6,599 42,524 860 573 50,556 Depreciation At 1 January 2013 5,262 34,061 839 - 40,162 Charged in year 259 2,969 108 - 3,336 Disposals - (1,202) (320) - (1,522) At 31 December 2013 5,521 35,828 627 - 41,976 Net book value At 31 December 2013 1,078 6,696 233 573 8,580 At 31 December 2012 1,168 7,830 244 450 9,692
Included above is Office and technical equipment held under finance leases amounting to a net book value of £430,000 (2012: £565,000).
49 Independent Television News Limited / Annual Report and Accounts 2013
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12. Fixed asset investments
Group
Subsidiary Other Cost and net book value undertakings investments Total £’000 £’000 £’000
As at 1 January 2013 - 2,418 2,418 Additions (a) - 200 200 Disposals (b) - (1,782) (1,782) Share of associate undertaking losses - (336) (336) As at 31 December 2013 - 500 500
(a) In January 2013, ITN increased its investment in Diagonal View Limited by £200,000.
(b) On 31 October 2013 ITN Education Investments Limited sold its entire investment in Espresso Group Limited, a Company registered in England and Wales. The investment cost of Espresso Group Limited in ITN Education Investments Limited was £1,782,000. Further information around the disposal is included in Note 7. As at 31 December 2013 the Group held the following investments all of which are registered in England and Wales:
Group Investments
Investment Nature ITN Archive Limited 100% Sale of archive material ITN Radio Investments Limited 100% Holding company ITN Radio Limited 100% Holding company (indirect) ITN Education Investments Limited 100% Holding company Independent Radio News Limited 19.7% Production of radio programming (indirect) Diagonal View Limited 49% Provision of digital videos Digital Care Social Enterprise limited 50% Provision of healthcare clips
50 Independent Television News Limited / Annual Report and Accounts 2013
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12. Fixed asset investments (continued)
Company
Subsidiary Other Cost and net book value undertakings investments Total £’000 £’000 £’000
As at 1 January 2013 1,782 290 2,072 Additions (a) - 200 200 Impairment (b) (1,782) - (1,782) As at 31 December 2013 - 490 490
(a) See (a) above.
(b) Following the sale of Espresso Group Limited, ITN Education Investments Limited (“ITNE”) paid a dividend to ITN Limited to distribute the reserves created. The receipt of this as a dividend and the associated reduction in ITNE share capital reduces the value that ITN as a company has in ITNE to nil. Please refer to the group investments table above for the investments held as at 31 December 2013. Please note that the share in Independent Radio News Limited is held by ITN Radio Limited, which is a 100% subsidiary of ITN Radio Investments Limited.
13. Debtors
Group Company 2013 2012 2013 2012 £’000 £’000 £’000 £’000
Trade debtors 11,976 10,126 10,928 10,035 Other debtors 1,494 1,934 1,224 1,896 Deferred tax 1,903 2,019 1,903 2,036 Amounts owed by subsidiary undertakings - - 1,332 769 Amounts owed by parent companies 523 - 523 - Prepayments and accrued income 5,904 5,346 5,855 5,267 21,800 19,425 21,765 20,003
All debtors other than deferred tax are recoverable within one year. Part of the shareholder loan to Diagonal View Limited of £313,913 (2012: £320,286) included in other debtors has been provided for.
51 Independent Television News Limited / Annual Report and Accounts 2013
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13. Debtors (continued) The deferred tax asset is recognised as the Directors are of the opinion that it is more likely than not that there will be sufficient taxable profits in the foreseeable future to utilise the losses. From this the reversal of the un- derlying timing difference can be deducted, or the tax losses offset against future taxable profits. Deferred tax
£’000
At 1 January 2013 2,019 Debited to profit and loss account (252) Prior year adjustment 137 At 31 December 2013 1,904
Deferred taxation is analysed as follows:
2013 2012 £’000 £’000
Depreciation in excess of capital allowances 1,318 1,512 Other short-term timing differences 162 320 Tax losses 424 187 1,904 2,019
14. Creditors: amounts falling due within one year
Group Company 2013 2012 2013 2012 £’000 £’000 £’000 £’000
Obligations under finance leases and hire purchase 223 211 223 211 contracts Trade creditors 1,102 2,090 1,102 2,090 Social security & other taxes 1,270 1,317 1,270 1,317 Other creditors 3,064 2,369 3,018 2,337 Accruals and deferred income 23,427 22,442 22,642 22,185 29,086 28,429 28,255 28,140
52 Independent Television News Limited / Annual Report and Accounts 2013
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15. Creditors: amounts falling due after more than one year
Group Company 2013 2012 2013 2012 £’000 £’000 £’000 £’000
Obligations under finance leases and hire purchase 118 352 118 352 contracts
Obligations under finance leases and hire purchase agreements are repayable as follows:
2013 2012 £’000 £’000 Group and Company Within one year 223 211 Between two and five years 118 352 341 563
16. Provisions for liabilities
Salary Property related Total Group and Company £’000 £’000 £’000
At 1 January 2013 1,718 1,015 2,733 Utilised during the year (225) (236) (461) Unwinding of discount on provisions (Note 5) 72 33 105 Charged in the year 1,012 240 1,252 At 31 December 2013 2,577 1,052 3,629
The property provision relates to a number of properties which are vacant and sublet at a loss. The provision covers the shortfall. The charge in 2013 includes an exceptional item of £540k in relation to vacant property costs.
Salary related provisions represent amounts in respect of Salary Security and in 2013 also included are amounts in respect of a Long Term Incentive Plan.
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17. Pensions The Group closed the ITN Defined Benefit Pension Scheme to future accrual, with effect from 31 March 2010. Subsequently, the Group provided pensions to all members of staff from 1 April 2010 through a defined contribu- tion stakeholder scheme. The pension cost and related provision are assessed in accordance with the advice of a professionally qualified actuary on a triennial basis. The latest actuarial valuation was as at 31 December 2011 and used the projected unit method. For 2014, the Group is expected to make a maximum contribution as part of the Pension Recovery Plan of £4.0 million (2013: £4.0 million) which includes Scheme expenses and Pension Protection Fund Levy. During the year, the Company offered scheme pensioners the ability to participate in a pension increase ex- change. As a result of this exercise there was a one-off exceptional settlement gain of £3.1 million. This has been disclosed as an exceptional gain within operating administration costs net of associated costs (£0.3 million). The major financial assumptions used to calculate the present value of scheme liabilities under FRS 17 are:
2013 2012 2011 2010 2009
Inflation 3.20% 2.70% 3.00% 3.40% 3.40% Rate of increases in salaries - - - - 3.40% Rates of increase of pensions in payment 3.10% 2.70% 3.00% 3.40% 3.40% Rate of increase for deferred pensioners 2.20% 2.00% 2.00% 2.90% 3.40% Discount rate 4.60% 4.50% 4.90% 5.40% 5.80% Expected return on scheme assets (1) 5.69% 5.82% 6.84% 7.03% 6.80%
(1) Note: This refers to the expected rate of return on assets as at the beginning of each period presented. The overall expected rate of return on the Scheme assets has been based on the average expected return of each asset class, weighted by the amount of assets in each class.
For mortality rates, the Company has used SAPS tables, with probabilities of death reduced by 10% for males and unreduced for females, with an allowance for future improvements in line with the CMI 2013 projections with a long-term improvement rate of 1% p.a. Following the finalisation of the 31 December 2011 Triennial Valuation, the proportion of married at retirement assumption was adjusted to reflect the valuation assumption of 80% for males and 70% for females (2012 90% males and 80% females) with any change in calculation being reflected in actuarial gains and losses.
54 Independent Television News Limited / Annual Report and Accounts 2013
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17. Pensions (continued) The employee benefit obligations of the scheme were:
2013 2012 2011 2010 2009 £m £m £m £m £m
Present value of funded obligations (392.7) (390.5) (367.6) (341.9) (321.0) Present value of unfunded obligations - - - - - Fair value of scheme assets 312.3 301.7 285.2 282.4 264.4 Deficit in the scheme (80.4) (88.8) (82.4) (59.5) (56.6) Related deferred tax asset 16.1 20.4 20.6 16.1 15.9 Net pension liability (64.3) (68.4) (61.8) (43.4) (40.7)
Assets in the plan as a percentage of total plan assets:
2013 2012 2011 2010 2009
Equities 46% 50% 49% 64% 63% Bonds and gilts 42% 45% 45% 29% 30% Other 12% 5% 6% 7% 7%
Expected rates of return at the start of the period were:
2013 2012 2011 2010 2009
Equities 6.90% 7.00% 7.95% 8.25% 7.50% Bonds and gilts 3.02% 4.90% 4.57% 5.26% 5.70% Other 2.79% 5.25% 6.10% 3.42% 5.40%
Profit and loss impact:
2013 2012 2011 2010 2009
Current service cost - - - 1.7 2.5 Expected return on pension scheme assets (15.9) (15.2) (17.7) (18.1) (15.9)
Interest on pension scheme liabilities 17.2 17.7 18.1 18.2 17.5 Gain on settlement (3.1) - - - - (Credit) / charge (1.8) 2.5 0.4 1.8 4.1
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17. Pensions (continued)
Amount recognised in the statement of total recognised gains and losses:
2013 2012 2011 2010 2009 £m £m £m £m £m Net actuarial (gains) / losses recognised in year (0.4) 8.1 26.8 4.0 18.2 Net cumulative actuarial losses 82.2 82.6 74.5 47.6 43.6
Actual return on plan assets
2013 2012 2011 2010 2009 £m £m £m £m £m Actual return on plan assets 17.8 25.2 11.0 29.2 32.0
Reconciliation of present value of plan liabilities and assets
Change in the present value of the defined 2013 2012 2011 2010 2009 benefit obligation £m £m £m £m £m
Opening defined benefit obligation 390.5 367.6 341.9 321.0 279.2 Service cost - - - 1.7 2.5 Interest cost 17.2 17.7 18.1 18.2 17.5 Contribution by plan participants - - - 0.3 1.3 Gain on settlement (3.1) - - - - Actuarial losses 1.5 18.1 20.2 15.0 34.3 Benefits paid (13.4) (12.9) (12.6) (14.3) (13.8) Closing defined benefit obligation 392.7 390.5 367.6 341.9 321.0
2013 2012 2011 2010 2009 Change in the fair value of plan assets £m £m £m £m £m
Opening fair value of plan assets 301.7 285.2 282.4 264.4 239.3 Expected return 15.9 15.2 17.7 18.1 15.9 Actuarial gains / (losses) 1.8 10.0 (6.6) 11.0 16.1 Contribution by employer 6.3 4.2 4.3 2.9 5.6 Contribution by plan participants - - - 0.3 1.3 Benefits paid (13.4) (12.9) (12.6) (14.3) (13.8) Closing fair value of plan assets 312.3 301.7 285.2 282.4 264.4
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17. Pensions (continued)
2013 2012 2011 2010 2009 £m £m £m £m £m History of experience gains and losses Defined benefit obligation (392.7) (390.5) (367.6) (341.9) (321.0) Plan assets 312.3 301.7 285.2 282.4 264.4 Deficit (80.4) (88.8) (82.4) (59.5) (56.6) Experience adjustments on plan liabilities - (0.2) (3.1) (22.0) - 4.9 gains / (losses) Experience adjustments on plan assets – 1.8 10.0 (6.6) 11.0 16.1 gains / (losses)
18. Called-up share capital At 31 December 2013 and 2012 the Company had 15,400,000 authorised ordinary shares of £1 each.
2013 2012 Group and Company £’000 £’000
Authorised, allotted, called-up and fully-paid: 400,000 ordinary shares of £1 each 400 400
19. Reserves
2013 Group Company Profit and loss account £’000 £’000
At 1 January 2013 (60,757) (60,757) Retained profit for the year 4,765 4,909 Net gains and losses relating to pension scheme (2,058) (2,058) At 31 December 2013 (58,050) (57,906)
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20. Reconciliation of movement in shareholders’ deficit
Group Company 2013 2012 2013 2012 £’000 £’000 £’000 £’000
Shareholders’ deficit at 1 January (60,357) (53,581) (60,357) (53,581) Retained profit for the year 4,765 1,088 4,909 1,088 Net gains and losses relating to pension scheme (2,058) (7,864) (2,058) (7,864) Shareholders’ deficit at 31 December (57,650) (60,357) (57,506) (60,357)
Shareholders’ deficit are all equity interests.
21. Reconciliation of operating profit to net cash inflow from operating activities
2013 2012 £’000 £’000
Operating profit 7,240 3,735
Exceptional settlement gain (3,077) - Depreciation charge 3,336 4,983 Profit on disposal of tangible fixed assets (55) (4) Increase in debtors (2,344) (472) Increase in creditors 735 3,992 Increase / (decrease) in provisions 791 (744) Incremental Company pension contributions in excess (6,276) (4,159) of that charged to operating profit
Net cash inflow 350 7,331
All activities are continuing.
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22. Reconciliation of movements in net funds
2013 2012 £’000 £’000
Increase in cash in the year 568 2,864 Cash inflow from issue of secured loan - (700) Cash outflow from repayment of secured loan - 2,796 Cash outflow / (inflow) from increase in obligations under 222 (312) finance leases Change in net funds resulting from cash flows 790 4,648
Movement in net cash for the period 790 4,648 Net funds as at 1 January 7,478 2,830 Net funds as at 31 December 8,268 7,478
1 January Cash 31 December 2013 flows 2013 £’000 £’000 £’000
Cash at bank and in hand 8,041 568 8,609 Obligation under finance leases (563) 222 (341) Net funds 7,478 790 8,268
23. Guarantees and other financial commitments
(a) Capital Commitments
2013 2012 Group and Company £’000 £’000
Contracted for but not provided for 234 198
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23. Guarantees and other financial commitments (continued)
(b) Operating lease commitments At 31 December 2013 the Group and Company had minimum annual commitments under non-cancellable operating leases as follows:
Land and buildings Other Group Company Group Company £’000 £’000 £’000 £’000
2013 Operating leases which expire: Within one year - - - - Between two and five years - - - - After more than five years 3,256 3,256 1,340 1,340 3,256 3,256 1,340 1,340
2012 Operating leases which expire: Within one year - - - - Between two and five years - - - - After more than five years 3,256 3,256 - - 3,256 3,256 - -
The lease commitments in respect of land and buildings are subject to upwards only rent reviews at various intervals specified in the leases.
(c) Minimum guarantee commitments
The Group has one contract (2012: two contracts) where it has minimum guarantee commitments relating to the sale of archive material. This contract is with ITV Global Entertainment Limited, a related party, totalling £700,000 (2012: £1,380,000).
Minimum guarantee commitments £’000 Expiring within one year 700 Expiring between two and five years - 700
(d) Pension Fund security
Significant assets have been provided as security to the ITN Pension Scheme in support of the recovery plan agreed with the Trustees to address the funding deficit.
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24. Related party transactions The Group enters into a number of transactions in the ordinary course of business with its shareholders, associated undertakings and other investments. At 31 December 2013, the shareholders were (either directly or via subsidiaries): ITV plc 40% Daily Mail and General Trust plc 20% Thomson Reuters Corporation 20% UBM plc 20% The Group made sales of £48,853,000 (2012: £54,582,000) to shareholders or entities controlled by shareholders in respect of the supply of news programming, facility sales, rental income and other archive programming. The Group made purchases of £3,388,000 (2012: £3,303,000) from shareholders in respect of the supply of news agency and other services. The following amounts are included within the balance sheet in respect of trade with shareholders:
2013 2012 Shareholder Balance Sheet Items £’000 £’000
Debtors 4,409 5,730 Other debtors 966 572 Creditors due within one year - - Other loans - - Other creditors 190 289
The Group made sales of £991,000 (2012: £687,000) to other investments held during the year (Note 12) in re- spect of the supply of on the day and archive content, programming, rental income, management and support fees.
The following amounts are included within the balance sheet in respect of trade with other investments:
2013 2012 Other Investments Balance Sheet Items £’000 £’000
Debtors 347 361 Other debtors 227 307
61 Independent Television News Limited / Annual Report and Accounts 2013
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Five year consolidated summary
2013 2012 2011 2010 2009 £’000 £’000 £’000 £’000 £’000
Turnover 105,829 108,739 98,207 96,249 98,474
Operating profit / (loss) before exceptionals 4,958 3,735 2,319 942 (2,892) Operating profit / (loss) exceptional items 2,282 - - - - Operating profit / (loss) after exceptional items 7,240 3,735 2,319 942 (2,892)
Net financial income / (expense) (981) (2,183) (11) (546) (1,283) Profit on disposal of investments 681 - - - - Share of profit/(loss) in joint venture/associates (336) - - - -
Profit / (loss) before taxation 6,604 1,552 2,308 396 (4,175)
Taxation (1,839) (464) (763) 61 791
Profit / (loss) for the year 4,765 1,088 1,545 457 (3,384)
62 INDEPENDENT TELEVISION NEWS LIMITED REGISTERED OFFICE: 200 GRAY’S INN ROAD LONDON WC1X 8XZ REGISTERED NUMBER: 548648 2013 ANNUAL REPORT